Preparation for Efficiency 






An Address 

Before the Terminal Railroad Department 

Young Men's Christian Association 

Washington, D. C, February 8, 1915 



By 

FAIRFAX HARRISON 

President, Southern Railway Company 



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PREPARATION FOR EFFICIENCY. 

As all the world recognizes, the business in which we are engaged — 
the transportation of persons and property by rail — is vital to the mainte- 
nance of present-day civilization. Merely to state that as a fact is to 
have a new respect for a railroad job. Another ground we have for self- 
respect is that our business is carried on by private capital and private 
labor. I am sure no forward-looking man now engaged in railroading 
wants to wear a government uniform and hold his job upon the condition 
of the influence of politics. But, although the industry is a private en- 
ycavor, still, because a railroad is a public highway over which for prac- 
tical reasons it is necessary for the operating company to exercise a 
monopoly of transportation, it has been subjected to public regulation ; so, 
as railroad employees, we are servants of the public as well as of the 
companies by which we are employed and we owe duties to both. The 
obligations of this dual service are fortunately not contradictory. The 
whole of our duty to the public, as well as of that to our companies, may 
be summed up in the single word "Efficiency." That statement is per- 
haps obvious, but what I want to urge upon you is that our personal effi- 
ciency is equally a purely selfish duty by those of us whose relation to 
the service is confined to that of employee. The word "Efficiency" has 
perhaps been overworked and its meaning has, by constant repetition, 
been somewhat dulled, but what it suggests is now more than ever the 
vital fact of the business from which we derive our bread and butter. 

All of us who depend upon the railroad service — public, stockholders 
and employees — should be proud of what we have already accomplished 
in the way of efficiency. I venture the assertion that, taking into con- 
sideration the character of railroad service and the conditions under v/hich 
it must be performed in all kinds of weather and with men working singly 
and in small groups widely scattered, the average level of efficiency in 
American railroad service will compare most favorably with that in any 
other industrial occupation. I am sure, however, that we all realize that 
we still fall short of that approximation to perfect service which is 
humanly possible. There are still occasions when trains are delayed by 
the faflure of someone along the line to do his full duty just at the right 
moment; there are numerous instances of loss and damage to freight 
resulting from mistakes and negligence, and there are regrettable cases 



of personal injury which might be prevented by a strict observance of 
the accumulated experience of our predecessors which finds expression in 
the rules or by that prompt action in an emergency which springs from 
intelligent industrial experience. 

The public interest in our efficiency is, as I have said, obvious. Our 
patrons want perfect service. A late passenger train causes irritation, 
discomfort, and inconvenience and may result in pecuniary loss through 
the missing of an important business engagement. The owner of freight 
in transit expects it to reach its destination within a reasonable time and 
in good condition. His business may be seriously interfered with if a 
car which should have arrived is held over at some division terminal a 
hundred miles away, or if the goods have been lost or arrive in damaged 
condition. . i 

Our stockholders are interested in efficiency because it measures tHe 
margin of their profit between gross revenue and the costs of operation. 
In these times, when the charge for railroad service may be advanced only 
by permission of public authority, it is seldom that anything can be done 
to widen the margin of profit or to prevent its narrowing to the vanishing 
point except to secure more economical operation. To some extent econ- 
omies may be, and largely have been, effected in the field of management, 
but real economy of operation is even more largely dependent upon in- 
dividual efficiency and intelligent team work throughout the rank and 
file of the organization. This is particularly important in times of de- 
scending gross revenues such as we have just been passing through. The 
units of railroad gross income — passenger-mile revenue and ton-mile 
revenue — are individually so small that they may almost be compared with 
the minute electrons which pervade material substances, but, like electrons 
again, they are so numerous that net income is materially aftected by the 
slightest change in train-raile operating co§t. T am sure that all of the 
members of this Association have realized the importance of this. I 
know that such of you as are in the employ of Southern Railway Com- 
pany have, and I am. glad to take this occasion publicly to express the 
high appreciation of the management of the way in which Southern 
Railway employees have stood shoulder to shoulder and worked loyally 
and efficiently for the best interests of the Company in the crisis through 
which we have been passing in common with the entire South since the 
beginning of the war in Europe. We have more nearly attained one hun- 
dred per cent efficiency than ever before and I am confident that, as busi- 
ness improves, we shall continue to go forward. 

The interest of the employee in efficiency of service resulting in 



economy of cost is sometimes lost sight of but it is none the less real and 
substantial. Operating' expenses, including wages, and dividends are paid 
from the same fund — gross earnings — with the important difference that 
operating expenses must be paid first even though little or nothing be 
left for dividends, and wages must be paid in full and when earned, 
while dividends -may be cut and deferred or may be omitted entirely. 
Even though wages must be paid first and regardless of what may hap- 
pen to dividends, the railroad employee who owns no stock in the company 
by which he is employed has a personal and vital interest in the net in- 
come of the company for which he works, indeed a more direct and im- 
mediate interest than that of the stockholder, because it is usually the 
sole source of personal livelihood and betterment of condition of the 
employee, while the stockholder seldom depends for his living on the 
dividends derived from a single industry. My point i's this: Every mem- 
ber of a railroad organization who thinks of the relations between labor 
and capital should steer clear of the fallacy of thinking that a railroad is a 
charitable foundation deriving the funds necessary to keep it going from 
the accumulation of capital. A railroad is a living thing, springing, it is 
true, from the loins of capital, but from its very birth the capitalist ceases 
to be the whole thing. The organism then consists of capital, labor and 
public, and is forthwith and thenceforth dependent upon the exertions of 
these three members for the conservation of its life and the welfare of all 
its members. Like all other living things which assume a constantly in- 
creasing obligation of work, it must from the moment of birth grow or 
die. When a railroad serves a progressive and developing country, it 
can never cease to increase its facilities to keep pace with the growing 
demand for its services. This is the condition of its life. One of the 
effects of this necessity is that, as a railroad grows and performs more 
service, the field for railroad employment is widened and the opportunity 
of the individual employee not only for increasing wages, but for promo- 
tion is broadened: and so the man who works for a prosperous railroad 
has a larger opportunity in life than one who works for a company whose 
fortunes are declining. Any of you who have ever been in the service 
of a company in the hands of a receiver will recognize what I mean. It 
is, then, of vital importance to the employee that his company should be 
prosperous, should earn a net income ample for its needs. 

For a railroad to be prosperous it is not enough that its income should 
be limited to what suffices for the payment of current wages and divi- 
dends, but it can not ever be expected that income shall be sufficient to 
provide for all the improvements which must be made. What is expected 



and what is necessary is that income shall be sufficient to provide iot . 
wages and dividends and still show such a margin as establishes credit. 
Most of you know what credit means in your personal affairs. A man 1 
who lives from hand to mouth, even though he may have enough to live i 
on, can not usually get credit at the grocery store. The grocer demands 
cash of him, while he gives time, and indeed is eager to give time, to the 
man who has a bank account and is known to be able to pay his debts 
whenever they are due. It is only a step further to the grocer himself. 
If his business is prosperous and he has earned the reputation of ability 
to pay his debts, and that means to earn what is necessary for that pur- 
pose, the banks stand ready and in turn are eager, for that is their busi- 
ness, to advance him money to buy a stock of goods which may be retailed 
out during the season. In many cases this advance exceeds what the 
grocer could pay at any given moment of the season or until his season's 
business has been wound up and all the profits are realized. This is 
credit. There are few merchants who can do business without credit, but 
I have never known any progressive railroad to which credit is not a vital 
necessity. To have credit a railroad must, therefore, have not only a 
reputation for honesty, but such a record of income as assures its ability 
to meet its obligations as they fall due. The large obligations of a rail- 
road are its capital obligations. The investor does not expect that the 
principal of the money he puts into the railroad shall be paid back, except 
at long intervals, but it is expected by the investor that he shall receive 
his interest or dividends regularly. The ability to meet this condition is 
the essence of the credit of a railroad, and here is where a safe margin 
of income is required. 

As new capital must be provided for the large improvements required 
for growth, those who adventure their funds by buying the securities of 
a railroad must have a reasonable assurance that the return will compare 
favorably with that on money invested in other lines of business. In the 
case of an established company seeking new capital, this assurance must 
be based on past performances, and funds for improving and enlarging 
facilities can be obtained on terms which a prudently managed business 
can accept only when the record of net income is such as to offer a rea- 
sonable assurance of continued profitable operation. m\ 

If, then, we are agreed that the class of employees to which you and 
I belong have an immediate selfish interest in working for a prosperous 
company, and that to be prosperous a railroad company must hold its 
expenses well within its revenues so that the margin of income may be 
safe, we must recognize that the interest of the employee u\ his own 



efficiency is a human expression of self help, not a galvanic response to 
some suggestion from without, not such an abnormal and cynical pressure 
on the individual as is implied in the words "speeding up." I would not 
myself be a party to any such method of exploiting a human being and I 
{ do not respect the man who seeks to establish such a practice in industry, 
but I do respect and do myself seek to practice a stimulation of the indi- 
vidual in every manly and straightforward way to increase his personal 
power and force and so his efficiency. What then is efficiency .? 

(r Efficiency is not the expression of a God-given genius. Men are not . 
born efficient but achieve efficiency by preparation for the exhibition of 7 
it. At such a time as this when the railroad industry is in difficulties 
and industrial efficiency is apparently the chief hope we have of work- 
ing out our- problem, the intelligent man who would succeed in rail- 
roading must therefore prepare himself. He must search his own heart 
with a ruthless determination to recognize his own defects of character 
and equipment, that by recognizing them he may strengthen himself. 
One of my colleagues in the railway service has recently propounded a 
shrewd catechism to aid in this self-study. It is worth while to mark it. 
I recommend that each of you ask himself the following questions. I 
know that it has done me good to act upon this advice: 

"Do you like your work? 

"Have you learned the best, quickest and easiest way of doing it? 

"Do you know where your greatest power lies? 

"Have you a fixed ^oal, in line with your supreme talent? 

"Do you believe absolutely in your own future? 

"Have you learned how to get well and keep well? 

"Have you made an inventory of your mental and moral traits? 

"Are you correcting your own weaknesses : mental, financial, social 
or spiritual? 

"Have you discovered which foods, baths and exercises increase your 
energy and heighten your mentality? 

"Are you independent, fearless, positive? 

"Are you tactful, cautious, courteous? 

"Have you secured the best possible advisers and associates? 

"Do you wish your rivals well, and never speak ill of them? 

"Do you work harder than anybody else in the business? 

"Have you learned the science of planning your day ahead? 

"Can you relax entirely in your leisure hours? 

''Are you saving money systematically? 

"Do you enjoy art, music, literature and the presence of little 
children ? 

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"Does your highest ambition include some real service to humanity ?" 

If the answers to these questions suggest something which one can 
do to make his individual work more efficient, the first step of preparatirn 
for greater efficiency is taken ; if, then, each of us improves his own se.-vice 
as a result, a long step forward towards the improvement of railroad 
credit and railroad prosperity, as well, will have been taken. It is worth 
the effort. 

From time to time we have had business depressions and it is 
probable that we shall have them in the future, but, as the country rallies 
from each one, the volume of business expands beyond its former limits 
with a corresponding demand for increased railroad service. That has 
been past experience and justifies our acting upon the confidence of its 
recurrence. It has almost become a law of American business. We are 
now on the road to recovery from the depression which came to a head' 
with the beginning of the war in Europe last summer. That conflict has 
withdrawn millions of tnen from agricultural and industrial occupations 
and we, in the United States, now have an opportunity such as we have 
never had before to obtain a larger share of the trade of the world. Many 
of our manufacturers are moving intelligently to take advantage of this 
opportunity and I believe that we may look forward to a new era of pros- 
perity in the United States which will bring about a steadily increasing 
demand for railroad service. If expanding business results in railroad 
prosperity it will bring with it a larger opportunity for personal pros- 
perity to the individual railroad man who is efficient. The highest effi- 
ciency of the individual railroad employee is attained only when he knows 
thoroughly, and performs faithfully, the duties of the position in which 
he is placed, but if he is looking for promotion he must at the same time 
understand the relation of his work to the service as a whole. He must 
look beyond his immediate job— in fine, he must show intelligence. I 
recommend to him, whatever may be his rank, to study the duties and 
to do as much as he can of the work of the position next ahead of the 
one which he occupies. He can usually do this without much opposition 
from his immediate superior. I have myself always attempted to do what 
I here recommend. 

As an instrumentality for obtaining this broader view of life, the 
Railroad Department of the Young Men's Christian Association, with 
the technical books in its libraries and with the classes of the Central 
Association open to its members, can be made most helpful. The Asso- 
ciation is doing work among railroad men that has high value. More 
railroad employees should avail themselves of the privilege of member- 
ship in it. 

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